Importer must pay customs duty and interest after 90 days per Sections 61(2) and 68(b); cancellation of self-assessed bill denied

The HC held that the relevant date for customs duty computation is when the importer filed the bill of entry for home consumption, and once assessment is complete under Section 68(b), the importer must pay duty and interest if goods remain in the warehouse beyond 90 days per Section 61(2). The Court ruled that cancellation or withdrawal of a self-assessed bill of entry for home consumption, accepted by the department, is not permissible under the Customs Act except upon relinquishment of title. The tribunal erred in allowing the importer's appeal seeking cancellation based on a letter dated 08.10.2021 and misapplied legal provisions. The HC set aside the tribunal's order, allowed the revenue's appeal, and affirmed that the importer's request for cancellation was not maintainable, answering the substantial legal questions in favor of the revenue.

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ISSUES:

Whether Section 46(5) of the Customs Act, 1962 permits cancellation of an already filed bill of entry for home consumption and reinstatement of a bill of entry for warehousing, or only allows substitution/modification of the type code of bill of entry.Whether the power under Section 46(5) can be exercised after self-assessment of duty and acceptance by the customs authority, thereby finalizing the assessment.Whether the conditions under Section 46(5)-that the interests of the revenue are not prejudicially affected and that there is no fraudulent intention-are conjunctive or disjunctive for permitting substitution of bills of entry.Whether an application for cancellation of a bill of entry for home consumption filed after assessment and self-assessment acceptance is maintainable without relinquishment of title to the goods under Section 68 of the Customs Act.Whether a reduction in duty rates after filing the application for cancellation affects the revenue interest and the permissibility of substitution under Section 46(5).Whether the date of presentation of the bill of entry for home consumption is the relevant date for determination of customs duty and tariff valuation under Section 15(1)(b) of the Customs Act.Whether the refusal to allow cancellation/substitution of bills of entry after final assessment and self-assessment is justified to prevent revenue loss.

RULINGS / HOLDINGS:

Section 46(5) of the Customs Act does not deal with cancellation of any bill of entry but only with the substitution or modification of the type code of bill of entry for home consumption and warehousing or vice versa; therefore, cancellation of an assessed bill of entry is not permissible under this provision.Once a bill of entry for home consumption is self-assessed and accepted by the customs authority without objection, the assessment reaches finality, and the importer's only option is to pay the duty; thus, the power under Section 46(5) cannot be exercised to cancel such bill of entry.The conditions in Section 46(5)-that the interests of the revenue are not prejudicially affected and that there is no fraudulent intention-are to be read disjunctively (i.e., "or" rather than "and") to align with the legislative intent and the scheme of the Customs Act.There is no provision in the Customs Act permitting withdrawal or cancellation of bills of entry for home consumption after assessment except where the importer relinquishes title to the goods under the proviso to Section 68; absent relinquishment, cancellation is not allowed.The reduction in duty rates after the date of the application for cancellation does not justify the substitution if the bill of entry was already assessed and duty was payable on the date of presentation; thus, revenue interest would be prejudicially affected if cancellation is permitted.Section 15(1)(b) provides that the relevant date for determination of duty and tariff valuation for goods cleared from warehouse is the date on which the bill of entry for home consumption is presented; hence, duty liability crystallizes on that date.The request for cancellation/substitution of bills of entry filed after final assessment and self-assessment acceptance is not maintainable and rightly rejected to prevent substantial revenue loss.

RATIONALE:

The Court applied statutory interpretation principles to Section 46(5) of the Customs Act, 1962, concluding that the term "and" connecting the conditions should be read as "or" to avoid absurdity and to give effect to the legislative intent as reflected in the Customs Act's overall scheme.Reliance was placed on established precedents interpreting statutory conjunctions and on the scheme of the Customs Act emphasizing finality of self-assessment and strict compliance with duty payment obligations.The Court referred to Section 68 and its provisos, highlighting that cancellation of bills of entry for home consumption post-assessment is only permissible upon relinquishment of title to goods, which was absent in the case.Precedents such as Jain Irrigation System and Khattar Enterprises were cited to underscore that once assessment is completed and duty is payable, the importer cannot seek re-conversion or cancellation of bills of entry to avoid payment.The Court rejected the argument based on later reduction of duty rates, holding that the relevant date for duty determination is the date of presentation of the bill of entry for home consumption, not the date of application for cancellation.The Court emphasized that the Customs Act is designed to prevent revenue loss and smuggling, and that allowing cancellation of self-assessed bills of entry post-acceptance would undermine this purpose.The Court noted the absence of any statutory provision allowing cancellation of bills of entry after acceptance and finality of assessment, except in cases of relinquishment of title, thus affirming the rejection of the importer's request.

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